Outside Publication

Proxy Advisory Firms: A Guide For Regulatory Reform, Emory Law Journal, Volume 62 Issue 5


As proxy advisory firms are used prevalently by institutional investors to aid them in voting their proxies, it is no surprise that the firms now find themselves the target of regulatory reform efforts.

While proxy advisory firms are frequently discussed in the news, criticized by boards of directors and corporate law scholars, and trumpeted by their clients, there is still a significant amount of misinformation and mischaracterization about their function, use, and influence. Because the SEC has announced its intentions to regulate the proxy advisory industry, an informed understanding of proxy advisory firms and their influence on the shareholder franchise is necessary for the promulgation of sound and nonreactive regulatory measures.

This Comment parses critics’ concerns with the proxy advisory industry and reconciles the motivations for regulation with how proxy advisory firms function and are used. Particularly, this Comment dispels the notion that proxy advisory firms wield too much influence over institutional investors and shareholder voting, and it explains that the fears of conflicts of interest are likely overstated.

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